Allowed

State Bank of India v. Dillu

DRT10 Aug 2026OA/1318/2024

Case brief

AI extract

What is this about?

The Tribunal allowed an application under Section 19 of the RDB Act for issuance of a Recovery Certificate. The court held that the defendant failed to lead evidence to substantiate allegations of blank signatures or non-disbursement, whereas the applicant proved the loan and default through documentary evidence.

What did the court decide?

Issuance of Recovery Certificate for Rs. 63,34,922/- with future interest at 8% p.a. (simple) from the date of filing of the OA.

State Bank of India versus Dillu — Banking and Recovery | DRT (2026)

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IN THE DEBTS RECOVERY TRIBUNAL II, BENGALURU

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Dated this 10^th Day of August, 2026

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Present: Sri. T. RAJESH Presiding Officer OA.No.1318/2024

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BETWEEN:

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State Bank of India, Stressed Asset Recovery Branch (SARB), J. C. Road, Bangalore – 560002, Rep. by its Chief Manager,

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…APPLICANT

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AND:

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Sri. M M Dillu, S/o. Machaiah, Residing at 160 A, Begur, Chinivada, Virajapete, Kodagu -571249.

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...DEFENDANT

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Counsel on record/appeared for:

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Applicant : R & J Associates Defendant : Sandhya U Prabhu

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: Sandhya U Prabhu

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FINAL ORDER

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The present Original Application in short “OA” has been filed under section 19 of Recovery of Debts and Bankruptcy Act 1993 seeking issuance of Recovery Certificate for Rs. 63,34,922/- (Rupees sixty-three lakh thirtyfour thousand nine hundred twenty-two only) with further interest thereon and cost from the Defendant.

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It is the case of the Applicant that the Defendant had initially availed

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a Kisan Credit Card (KCC) loan of Rs. 5,72,000/- (Rupees Five Lakh

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OA 1318/2024

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Seventy-Two Thousand Only) from the Applicant Bank for obtaining financial assistance for agricultural purposes. The said KCC facility was renewed and enhanced from time to time at the request of the Defendant. In particular, the KCC limit was renewed/enhanced as follows:

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On 07.07.2014, the KCC limit was renewed/enhanced to Rs. 6,29,000/- (Rupees Six Lakh Twenty-Nine Thousand Only);

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On 29.02.2016, it was further renewed/enhanced to Rs. 7,61,000/(Rupees Seven Lakh Sixty-One Thousand Only);

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On 13.03.2017, it was again renewed/enhanced to Rs. 8,37,000/(Rupees Eight Lakh Thirty-Seven Thousand Only).

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Thereafter, on 20.04.2017, the Defendant submitted a request seeking enhancement of the Kisan Credit Card (KCC) limit to Rs. 18,46,200/(Rupees Eighteen Lakh Forty-Six Thousand Two Hundred Only) for agricultural purposes, namely cultivation of crops. Subsequently, at the request of the Defendant, the KCC facility was renewed/enhanced to Rs. 13,87,100/- (Rupees Thirteen Lakh Eighty-Seven Thousand One Hundred Only) on 04.04.2018. Thereafter, upon consideration of the Defendant's request for enhancement, the Applicant Bank sanctioned and renewed the KCC facility for a sum of Rs. 16,78,400/- (Rupees Sixteen Lakh SeventyEight Thousand Four Hundred Only) on 03.02.2020, against the requested enhancement of Rs. 18,46,200/-.

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Thereafter, the Defendant also availed several Agricultural Term Loans from the Applicant Bank. Initially, the Defendant availed an

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OA 1318/2024

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Agricultural Term Loan of Rs. 7,20,000/- (Rupees Seven Lakh Twenty Thousand Only) for the construction of an irrigation tank. Subsequently, the Defendant availed another Agricultural Term Loan of Rs. 2,50,000/(Rupees Two Lakh Fifty Thousand Only) for the purchase of an Omni vehicle. Thereafter, the Defendant availed an Agricultural Term Loan of Rs. 6,00,000/- (Rupees Six Lakh Only) for the construction of a drying yard and, lastly, availed another Agricultural Term Loan of Rs. 6,00,000/(Rupees Six Lakh Only) for the construction of labour quarters.

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It is further the case of the Applicant that, in consideration of the aforesaid credit facilities, the Defendant executed the requisite loan and security documents, including the Mortgage Deed, Hypothecation Agreement, and other necessary documents in favour of the Applicant Bank. As security for the due repayment of the said credit facilities, the Defendant created a mortgage over the schedule property and hypothecation over the movable assets in favour of the Applicant Bank.

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It is the case of the Applicant that the Defendant, despite availing the credit facility, agreeing with the Terms and Conditions for the loans, failed in complying with the same, resulting in defaults and consequentially turning the loan accounts as Non-Performing Asset (NPA).

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In the above circumstances, the Applicant approached this Tribunal by filing this OA seeking issuance of Recovery Certificate for the amount due in the account.

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OA 1318/2024

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Summons were issued to the defendant. The defendant entered appearance through vakalat and filed their written statement. However, despite being granted sufficient opportunity, they failed to adduce their evidence. Accordingly, the defendant evidence was closed on 06.08.2026.

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The Defendant, in the Written Statement, has contended that the Applicant obtained his signatures on various blank documents by assuring him that the same would be filled up at a later stage and that he was, therefore, unaware of the contents thereof. The Defendant has further alleged that one such blank document has subsequently been converted into a Hypothecation Agreement without his knowledge or consent. The Defendant has also contended that he is not aware of the execution of any Mortgage Deed and that the Applicant has neither pleaded nor established that the original title deeds were deposited with the Applicant Bank. According to the Defendant, in the absence of deposit of the original title deeds, the alleged mortgage is not valid under the provisions of the Transfer of Property Act. The Defendant has further contended that, although the Applicant has stated that he had sought financial assistance of Rs. 18,46,200/- (Rupees Eighteen Lakh Forty-Six Thousand Two Hundred Only), the said amount was never disbursed. The Defendant has also alleged that the Applicant has not furnished the particulars of the rate of interest charged, the period for which interest and penal interest have been levied, or the basis for applying different rates of interest. It is further contended that, after the loan account was classified as a Non-Performing

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OA 1318/2024

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Asset (NPA), interest could not have been capitalized or compounded.

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The Applicant had let in evidence through AW-1, who filed Proof Affidavit reiterating the contentions taken in the OA and also produced Exhibits A-1 to A-34, got the same marked in evidence.

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Heard both sides and considered the contentions raised in the OA

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in the light of the documentary evidence and proof affidavits. It is noted that the Applicant alone has adduced evidence in support of its case, whereas the Defendant have not led any evidence and have merely filed their written statement.

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The following issues arise for consideration in this matter:

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i) Whether the Applicant succeeded in proving the OA claim as

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against the Defendant?

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ii) If so, to what extent?

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Both these issues are gone into and decided together.

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The objections raised by the Defendant do not merit acceptance.

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Upon perusal of the OA, statement of account, and documents produced by the Applicant, it is evident that the KCC loan facility was disbursed to the Defendant and thereafter renewed/enhanced from time to time. The Applicant has also produced the renewal/enhancement requests submitted by the Defendant and the corresponding sanction of the

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OA 1318/2024

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enhanced limits by the Applicant Bank, which clearly establishes that the Defendant had sought and availed the said facilities.

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The contention regarding the disbursement the statement of account clearly reflects the disbursement of a sum of Rs.16,78,400/- to the Defendant towards the renewed KCC facility, and the Applicant’s claim is founded on the said disbursement and the liability arising therefrom. Therefore, the contention that no amount was disbursed is contrary to the documentary evidence on record. The allegations regarding obtaining signatures on blank documents and subsequent conversion thereof into a Hypothecation Agreement have also not been substantiated by any evidence. Likewise, the Defendant has failed to establish that the loan documents relied upon by the Applicant were not executed with his knowledge or consent.

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As regards the mortgage, the Defendant has merely disputed the same and contended that the original title deeds were not deposited, without placing any evidence to substantiate such contention. The statement of account and other documents produced by the Applicant also contain the particulars of the financial transaction and the liability of the Defendant. The Defendant has not produced any contrary account or other material to disprove the amount due or the manner in which the liability

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OA 1318/2024

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has been reflected. The contention regarding the rate of interest, penal

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interest and capitalization of interest is likewise unsupported by any evidence. In the absence of any material placed by the Defendant to rebut the Applicant’s documentary evidence, the aforesaid contentions do not create any ground to disbelieve the Applicant’s claim.

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The evidence tendered by the Applicant remains uncontroverted and undisputed. The evidence put forth by the Applicant is found admissible and sufficient to prove the averments made in the OA, and the default committed by the Defendant in repaying the loan amount due. The liability of the Defendant and the loan amount due are also proved by the above documents.

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Hence in view of the above findings this Tribunal comes to the conclusion that the OA is liable to be allowed.

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Taking into consideration of the fact that the loan is availed for agricultural purposes and also the fact that OA claim is arrived at by calculating interest at the agreed rate, pendente lite and future interest is awarded at 8.00% (simple). The prayer for interest with compounded monthly rests and for penal interest for the future period is hereby declined.

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OA 1318/2024

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In the result, OA.No. 1318/2024, is allowed,

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i) The Applicant is allowed to recover an aggregate sum of Rs. 63,34,922/- (Rupees sixty-three lakh thirty-four thousand nine hundred and twenty-two only) with pendente lite and future interest of 8.00% p.a. (simple) from the date of filing of the OA till the realization from the Defendant personally after giving credit to all the amounts recovered and received during the pendency of the OA if any, and allow the same to be recovered by proceeding against the schedule properties. Properties schedule to the OA be the schedule to the Recovery Certificate.

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ii) If the sale proceeds are found insufficient to clear the loan amount due from the Defendant personally, then the Applicant Bank shall be at liberty to proceed against his other assets for recovery of the balance

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amount due.

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iii) The applicant bank is allowed cost of the proceedings for which Applicant to file cost memo within seven days from the date of receipt of the order.

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iv) The Recovery Certificate to be drawn in terms of this order and transferred to Recovery for execution.

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v) Interim application pending, if any, stands disposed of in terms of this final order.

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Communicate a copy of the order to the parties concerned in terms

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OA 1318/2024

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of Section 19(21)(i) of the RDB Act, read with Rule 16 of DRT (Procedure)

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Rules, 1993.

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(Dictated to PY directly on the Computer, after its transcription, corrected and pronounced by me in the open Court on this the 10^th day of August, 2026).

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Sd/(T. RAJESH)

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PRESIDING OFFICER

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ANNEXURES

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WITNESSES EXAMINED FOR THE APPLICANT BANK:

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AW-1: Govind Laxman Ballal, Chief Manager, of Applicant Bank.

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Exhibits on the part of the Applicant:

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Exhibit Nos.	Date	Particulars of Documents
A1	01.06.2013	Application Form
A2	05.06.2013	Letter of Arrangement
A3	05.06.2013	Hypothecation agreement
A4	05.06.2013	Mortgage Deed
A5	07.07.2014	Renewal/Enhancement application form
A6	07.07.2014	Letter of arrangement
A7	29.02.2016	Renewal/Enhancement application form
A8	29.02.2016	Sanction letter
A9	13.03.2017	Renewal/Enhancement application form
A10	13.03.2017	Sanction letter
A11	20.04.2017	Application form
A12	20.04.2017	Mortgage Deed
A13	24.04.2017	Letter of Arrangement
A14	24.04.2017	Hypothecation agreement
A15	04.04.2018	Renewal/Enhancement application form
A16	04.04.2018	Sanction letter
A17	03.02.2020	Application for renewal
A18	03.02.2020	Sanction letter
A19	21.04.2016	Application form
A20	21.04.2016	Sanction letter

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OA 1318/2024

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A21	21.04.2017	Application form
A22	21.04.2017	Sanction letter
A23	21.04.2017	Application form
A24	21.04.2017	Sanction letter
A25	13.04.2018	Application form
A26	13.04.2018	Sanction letter
A27	04.04.2018	Mortgage Deed
A28	09.02.2024	Legal notice and postal receipt
A29	--	Statement of account
A30	--	Statement of account
A31	--	Statement of account
A32	--	Statement of account
A33	--	Statement of account
A34	--	Bankers certificate

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Witness Examined for the Defendant: List of Documents Exhibited for the Defendant:

-Nil -

-Nil -

Sd/-

(T. RAJESH)

PRESIDING OFFICER

State Bank of India v. Dillu

Case brief

What is this about?

What did the court decide?

State Bank of India v. Dillu

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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Case details

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